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Item 1. Financial Statements

2022-07-29 compared with 2022-04-29 · 179 added, 71 removed, 337 unchanged (43% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2022 2021 2022 2021

REVENUE $ 149,041 152,241 $ 273,343 267,026

16 unchanged sentences

Pension non-service cost 941 339 1,890 665

Gain on sale of Texas Water Alliance — 3,000 — 3,000

Other, net 824 1,784 1,819 3,538

Income before income taxes 13,926 24,081 18,730 25,801

Provision (benefit) for income taxes 1,067 ( 896 )

Provision for income taxes 2,368 3,306 3,435 2,410

NET INCOME 11,558 20,775 15,295 23,391

29 unchanged sentences

Accounts receivable:

Customers, net of allowances for uncollectible accounts of $ 5,113 and $ 4,600 on March 31, 2022 and December 31, 2021, respectively

Customers, net of allowances for uncollectible accounts of $ 5,222 and $ 4,600 on June 30, 2022 and December 31, 2021, respectively

58,815 53,699

23 unchanged sentences

authorized 70,000,000 shares;

issued and outstanding shares 30,237,145 on March 31, 2022 and 30,181,348 on December 31, 2021

issued and outstanding shares 30,247,674 on June 30, 2022 and 30,181,348 on December 31, 2021

Additional paid-in capital 608,666 606,392

11 unchanged sentences

Accrued payroll 9,814 11,583

Income tax payable 1,087 —

Other current liabilities 20,633 27,821

28 unchanged sentences

BALANCES, March 31, 2022 30,237,145 30 607,637 421,095 ( 344 ) 1,028,418

Net income — — — 11,558 — 11,558

Unrealized gain on investment, net of tax of $ —

— — — — ( 248 ) ( 248 )

Stock-based compensation — — 1,041 ( 23 ) 1,018

Issuance of restricted and deferred stock units 10,529 — ( 6 ) — — ( 6 )

Common stock issuance, net of costs — — ( 6 ) — — ( 6 )

Dividends paid ($ 0.36 per share)

— — — ( 10,889 ) — ( 10,889 )

BALANCES, June 30, 2022 30,247,674 $ 30 $ 608,666 $ 421,741 $ ( 592 ) $ 1,029,845

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

SJW GROUP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)

Common Stock Additional

15 unchanged sentences

BALANCES, March 31, 2021 29,789,887 30 578,395 400,897 ( 1,026 ) 978,296

Net income — — — 20,775 — 20,775

Unrealized gain on investment, net of tax of $ 39

— — — — 107 107

Stock-based compensation — — 791 ( 28 ) — 763

Issuance of restricted and deferred stock units 15,040 — ( 9 ) — — ( 9 )

Common stock issuance, net of costs — — ( 120 ) — — ( 120 )

Dividends paid ($ 0.34 per share)

— — — ( 10,133 ) — ( 10,133 )

BALANCES, June 30, 2021 29,804,927 $ 30 $ 579,057 $ 411,511 $ ( 919 ) $ 989,679

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Three months ended March 31,

Six months ended June 30,

OPERATING ACTIVITIES:

5 unchanged sentences

Allowance for equity funds used during construction ( 1,084 ) ( 916 )

Gain on sale of nonutility properties ( 5,450 ) —

Gain on sale of nonutility properties and Texas Water Alliance ( 5,450 ) ( 3,000 )

Changes in operating assets and liabilities:

13 unchanged sentences

Payments to retire utility plant, net of salvage ( 1,836 ) ( 909 )

Proceeds from sale of nonutility properties 227 —

Proceeds from sale of nonutility properties and Texas Water Alliance 227 3,000

Payments for business acquisitions ( 33 ) ( 1,452 )

6 unchanged sentences

Issuance of common stock, net of issuance costs — 66,775

Debt issuance costs — ( 296 )

Dividends paid ( 21,771 ) ( 19,857 )

14 unchanged sentences

Utility property installed by developers 1,066 1,230

Accrued additional common stock issuance costs — 353

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

JUNE 30, 2022

(in thousands, except share and per share data)

3 unchanged sentences

SJW Group is a holding company with five wholly-owned subsidiaries:

San Jose Water Company (“SJWC”), SJWNE LLC, SJWTX, Inc., SJW Land Company, and SJW Holdings, Inc.

San Jose Water Company (“SJWC”), SJWNE LLC, SJWTX, Inc., SJW Land Company, and SJWTX Holdings, Inc.

SJWNE LLC is the holding company for Connecticut Water Service, Inc.

9 unchanged sentences

The major streams of revenue for SJW Group are as follows:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2022 2021 2022 2021

Revenue from contracts with customers $ 148,657 147,204 $ 270,434 259,442

5 unchanged sentences

Real Estate Investments and Nonutility Properties

The major components of real estate investments and nonutility properties as of March 31, 2022, and December 31, 2021, are as follows:

The major components of real estate investments and nonutility properties as of June 30, 2022, and December 31, 2021, are as follows:

2022 December 31,

5 unchanged sentences

On October 29, 2021, SJWC sold two nonutility properties located in San Jose, California for $ 13,150 .

SJW Group recognized a pre-tax gain on the sale of nonutility properties of $ 7,230 , after selling expenses of $ 277 for one of the properties sold, and a gain of $ 5,442 , after selling expenses of $ 178 , was deferred on the other nonutility property pending CPUC review for the year

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2022

June 30, 2022

(in thousands, except share and per share data)

ended December 31, 2021.

On February 15, 2022, the California Public Utilities Commission (“CPUC”) review was completed and $ 5,442 was recognized as gain on sale of nonutility properties.

Commission (“CPUC”) review for the year ended December 31, 2021.

On February 15, 2022, the CPUC review was completed and $ 5,442 was recognized as gain on sale of the second nonutility property.

A former wholly owned subsidiary of SJW Group, Texas Water Alliance Limited, was sold to Guadalupe-Blanco River Authority (“GBRA”) in 2017.

The sales agreement with GBRA included a holdback amount of $ 3,000 to be paid to SJW Group on June 30, 2021, subject to reduction under certain conditions.

SJW Group received the holdback amount without reduction from the GBRA on June 29, 2021 and recognized a pre-tax gain on sale of $ 3,000 .

Fair Value Measurement

The following instruments are not measured at fair value on SJW Group’s condensed consolidated balance sheets as of March 31, 2022, but require disclosure of their fair values:

The following instruments are not measured at fair value on SJW Group’s condensed consolidated balance sheets as of June 30, 2022, but require disclosure of their fair values:

cash and cash equivalents, accounts receivable and accounts payable.

The estimated fair value of such instruments as of March 31, 2022, approximates their carrying value as reported on the condensed consolidated balance sheets.

The estimated fair value of such instruments as of June 30, 2022, approximates their carrying value as reported on the condensed consolidated balance sheets.

The estimated fair value of such financial instruments were determined using the income approach based on the present value of estimated future cash flows.

There have been no changes in valuation techniques during the three months ended March 31, 2022.

There have been no changes in valuation techniques during the three and six months ended June 30, 2022.

The fair value of these instruments would be categorized as Level 2 in the fair value hierarchy, with the exception of cash and cash equivalents, which would be categorized as Level 1.

The fair value of SJW Group’s long-term debt was approximately $ 1,493,425 and $ 1,651,825 as of March 31, 2022, and December 31, 2021, respectively, and was determined using a discounted cash flow analysis, based on the current rates for similar financial instruments of the same duration and creditworthiness of the company.

The book value of long-term debt was $ 1,530,475 and $ 1,532,041 as of March 31, 2022, and December 31, 2021, respectively.

The fair value of SJW Group’s long-term debt was approximately $ 1,348,114 and $ 1,651,825 as of June 30, 2022, and December 31, 2021, respectively, and was determined using a discounted cash flow analysis, based on the current rates for similar financial instruments of the same duration and creditworthiness of the company.

The book value of long-term debt was $ 1,494,675 and $ 1,532,041 as of June 30, 2022, and December 31, 2021, respectively.

The fair value of long-term debt would be categorized as Level 2 in the fair value hierarchy.

Connecticut Water Service, Inc.’s (“CTWS”) additional retirement benefits under the supplemental executive retirement plans and retirement contracts are funded by investment assets held by a Rabbi Trust.

The fair value of the money market funds, mutual funds and fixed income investments in the Rabbi Trust was $ 3,469 and $ 3,797 as of March 31, 2022, and December 31, 2021, respectively, and are categorized as Level 1 in the fair value hierarchy.

CTWS additional retirement benefits under the supplemental executive retirement plans and retirement contracts are funded by investment assets held by a Rabbi Trust.

The fair value of the money market funds, mutual funds and fixed income investments in the Rabbi Trust was $ 3,117 and $ 3,797 as of June 30, 2022, and December 31, 2021, respectively, and are categorized as Level 1 in the fair value hierarchy.

Earnings per Share

1 unchanged sentence

Diluted earnings per share is calculated using income available to common stockholders divided by the weighted average number of shares of common stock including both shares outstanding and shares potentially issuable in connection with restricted common stock awards under SJW Group’s Long-Term Incentive Plan (as amended, the “Incentive Plan”), shares potentially issuable under the performance stock plans assumed through the business combination with CTWS, and shares potentially issuable under the Employee Stock Purchase Plan (“ESPP”).

For the three months ended March 31, 2022 and 2021, 10,860 and 8,579 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

For the three months ended June 30, 2022 and 2021, 4,964 and 4,304 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

For the six months ended June 30, 2022 and 2021, 15,824 and 12,883 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

(in thousands, except share and per share data)

Regulatory Matters

Regulatory assets, net are comprised of the following as of March 31, 2022, and December 31, 2021:

March 31, 2022 December 31, 2021

Regulatory assets, net are comprised of the following as of June 30, 2022, and December 31, 2021:

June 30, 2022 December 31, 2021

Regulatory assets:

8 unchanged sentences

Total regulatory assets, net, less current portion $ 139,312 151,992

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2022

(in thousands, except share and per share data)

As of March 31, 2022, and December 31, 2021, SJW Group’s regulatory assets, net not earning a return primarily included postretirement pensions and other medical benefits unfunded amount, and business combination debt premiums, net.

The total amount of regulatory assets, net not earning a return at March 31, 2022, and December 31, 2021, either by interest on the regulatory asset/liability or as a component of rate base at the allowed rate of return was $ 85,446 and $ 84,887 , respectively.

As of June 30, 2022, and December 31, 2021, SJW Group’s regulatory assets, net not earning a return primarily included postretirement pensions and other medical benefits unfunded amount, and business combination debt premiums, net.

The total amount of regulatory assets, net not earning a return at June 30, 2022, and December 31, 2021, either by interest on the regulatory asset/liability or as a component of rate base at the allowed rate of return was $ 85,798 and $ 84,887 , respectively.

Balancing and Memorandum Accounts

5 unchanged sentences

Drought surcharges collected will be used to offset the revenue losses tracked in the WCMA.

Balancing and memorandum accounts recorded to regulatory assets, net for the three months ended March 31, 2022, and 2021 as follows:

Three months ended March 31, 2022 Three months ended March 31, 2021

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

(in thousands, except share and per share data)

Balancing and memorandum accounts recorded to regulatory assets, net for the three and six months ended June 30, 2022, and 2021 as follows:

Three months ended June 30, 2022 Three months ended June 30, 2021

Beginning Balance Regulatory Asset Increase (Decrease) Refunds (Collections) Adjustments Ending Balance Beginning Balance Regulatory Asset Increase (Decrease) Refunds (Collections) Adjustments Ending Balance

8 unchanged sentences

Pension 5,006 63 — 5,069 3,844 366 — 4,210

Hydro Generation Research, Development and Demonstration Memorandum Account (“PRVMA”)

632 1 ( 90 ) 543 1,027 — ( 99 ) 928

COVID-19 Catastrophic Event Memorandum Account (“CEMA”) 2,438 148 — 2,586 2,266 352 — 2,618

All others 573 ( 94 ) — 479 445 1 — 446

Total cost-recovery accounts $ 19,438 440 ( 90 ) 19,788 $ 16,492 1,703 ( 98 ) 18,097

Total $ 33,800 1,962 ( 10,990 ) 24,772 $ 28,137 3,273 ( 93 ) 31,317

Six months ended June 30, 2022 Six months ended June 30, 2021

Revenue accounts:

MWRAM $ 16,866 4,229 1 21,096 $ 12,077 3,200 1 15,278

WCMA 3,534 ( 1,100 ) ( 17,395 ) ( 14,961 ) 666 — 2 668

Cost of capital memorandum account ( 1,563 ) ( 5 ) — ( 1,568 ) ( 1,561 ) ( 1 ) — ( 1,562 )

All others ( 386 ) 802 1 417 ( 1,139 ) ( 28 ) 3 ( 1,164 )

Total revenue accounts $ 18,451 3,926 ( 17,393 ) 4,984 $ 10,043 3,171 6 13,220

Cost-recovery accounts:

Water supply costs 10,545 566 — 11,111 8,123 1,771 1 9,895

Pension 4,941 128 — 5,069 3,478 732 — 4,210

707 2 ( 166 ) 543 1,108 — ( 180 ) 928

CEMA 3,245 ( 659 ) — 2,586 2,266 352 — 2,618

2 unchanged sentences

Total $ 38,334 3,997 ( 17,559 ) 24,772 $ 25,463 6,027 ( 173 ) 31,317

All balancing accounts and memorandum-type accounts not included for recovery or refund in the current general rate case will be reviewed by the CPUC in SJWC’s next general rate case or at the time an individual account balance reaches a threshold of 2 % of authorized revenue, whichever occurs first.

Bank Borrowings and Long-Term Liabilities

SJW Group’s contractual obligations and commitments include senior notes, bank term loans, revenue bonds, state revolving fund loans and other obligations.

Water Utility Services have received advance deposit payments from its customers on certain construction projects.

The refunds of the advance deposit payments constitute an obligation of the respective subsidiaries.

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2022

June 30, 2022

(in thousands, except share and per share data)

Income tax expense (benefit) for the three months ended March 31, 2022, and 2021, was $ 1,067 and $( 896 ), respectively.

The effective consolidated income tax rates were 22 % and ( 52 )% for the three months ended March 31, 2022, and 2021, respectively.

The higher effective tax rate for the three months ended March 31, 2022, was primarily due to discrete tax expense items.

SJW Group had unrecognized tax benefits, before the impact of deductions of state taxes, excluding interest and penalties of approximately $ 8,014 and $ 7,961 as of March 31, 2022, and December 31, 2021, respectively.

Bank Borrowings and Long-Term Liabilities

SJW Group’s contractual obligations and commitments include senior notes, bank term loans, revenue bonds, state revolving fund loans and other obligations.

Water Utility Services had received advance deposit payments from its customers on certain construction projects.

The refunds of the advance deposit payments constitute an obligation of the respective entities.

On April 6, 2022, Maine Water entered into a credit agreement with a commercial bank, pursuant to an existing master loan agreement under which the commercial bank issued Maine Water a promissory note on the same date with an aggregate principal amount of $ 15,000 and a fixed interest rate of 4.54 %, due May 31, 2042.

The notes are unsecured obligations of Maine Water.

Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year.

The promissory note contains customary representations and warranties.

Under the promissory note, Maine Water is required to comply with certain customary affirmative and negative covenants for as long as the notes are outstanding.

The notes are also subject to customary events of default, the occurrence of which may result in all of the notes then outstanding becoming immediately due and payable.

Proceeds from the borrowing were received on May 13, 2022.

On June 28, 2022, Connecticut Water entered into a note purchase agreement with certain affiliates of New York Life Insurance Company, pursuant to which Connecticut Water sold an aggregate principal amount of $ 25,000 of its 4.71 % Senior Notes, Series 2022, due 2052.

The closing of the note purchase agreement is expected to occur on December 15, 2022, and is subject to customary closing conditions and regulatory approval.

The Series 2022 Notes are unsecured obligations of Connecticut Water.

Interest is payable semi-annually in arrears on June 15th and December 15th of each year.

The note purchase agreement contains customary representations and warranties.

Connecticut Water has agreed to customary affirmative and negative covenants for as long as the Series 2022 Notes are outstanding.

The Series 2022 Notes are also subject to customary events of default, the occurrence of which may result in all of the Series 2022 Notes then outstanding becoming immediately due and payable.

For the three and six months ended June 30, 2022, income tax expense was $ 2,368 and $ 3,435 , respectively.

Income tax expense for the three and six months ended June 30, 2021, was $ 3,306 and $ 2,410 , respectively.

The effective consolidated income tax rates were 17 % and 14 % for the three months ended June 30, 2022 and 2021, respectively, and 18 % and 9 % for the six months ended June 30, 2022, and 2021, respectively.

The higher effective tax rate for the three and six months ended June 30, 2022, was primarily due to discrete tax expense items.

SJW Group had unrecognized tax benefits, before the impact of deductions of state taxes, excluding interest and penalties, of approximately $ 8,221 and $ 7,961 as of June 30, 2022, and December 31, 2021, respectively.

SJW Group does not expect its unrecognized tax benefits to change significantly within the next 12 months.

7 unchanged sentences

Certain CTWS employees hired before March 1, 2012, and covered by a plan merged into the CTWS plan in 2013 are also entitled to benefits based on the employee’s years of service and compensation.

CTWS employees hired on or after January 1, 2009, are entitled to an additional 1.5 % of eligible compensation to their company sponsored savings plan.

CTWS employees hired on or after January 1, 2009, are entitled to

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

(in thousands, except share and per share data)

an additional 1.5 % of eligible compensation to their company sponsored savings plan.

SJW Group does not have multi-employer plans.

2 unchanged sentences

The supplemental retirement plans and Cash Balance Executive Supplemental Retirement Plan are non-qualified plans in which only senior management and other designated members of management may participate.

SJW Group also provides health care and life insurance benefits for retired employees under employer-sponsored postretirement benefits other than pension plans.

The components of net periodic benefit costs for the defined benefit plans and other postretirement benefits for the three months ended March 31, 2022, and 2021 are as follows:

Three months ended March 31,

SJW Group also provides health care and life insurance benefits for retired employees under employer-sponsored postretirement benefits that are not pension plans.

The components of net periodic benefit costs for the defined benefit plans and other postretirement benefits for the three and six months ended June 30, 2022, and 2021 are as follows:

Three months ended June 30, Six months ended June 30,

2022 2021 2022 2021

Service cost $ 2,652 2,688 $ 5,304 5,423

5 unchanged sentences

In 2022, SJW Group expects to make required and discretionary cash contributions of up to $ 7,842 to the pension plans and other postretirement benefits.

For the three months ended March 31, 2022, SJW Group has made no contributions to the plans.

The Incentive Plan allows SJW Group to provide employees, non-employee board members or the board of directors of any parent or subsidiary, consultants, and other independent advisors who provide services to the company or any parent or

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2022

(in thousands, except share and per share data)

subsidiary the opportunity to acquire an equity interest in SJW Group.

SJW Group also maintains stock plans in connection with its acquisition of CTWS which are no longer granting new awards under the plan.

As of March 31, 2022, 179,833 shares are issuable upon the vesting of outstanding restricted stock units and deferred restricted stock units and an additional 625,071 shares are available for award issuances under the Incentive Plan.

A summary of compensation costs charged to income and proceeds from the exercise of restricted stock and similar instruments that are recorded to additional paid-in capital and common stock, by award type, are presented below for the three months ended March 31, 2022, and 2021:

Three months ended March 31,

For the three and six months ended June 30, 2022, SJW Group has made $ 1,961 contributions to such plans.

SJW Group also maintains stock plans in connection with its acquisition of CTWS which are no longer granting new stock awards.

As of June 30, 2022, 178,820 shares are issuable upon the vesting of outstanding restricted stock units and deferred restricted stock units and an additional 615,154 shares are available for award issuances under the Incentive Plan.

Three months ended June 30, Six months ended June 30,

2022 2021 2022 2021

Compensation costs charged to income:

4 unchanged sentences

Restricted Stock and Deferred Restricted Stock

For the three months ended March 31, 2022, and 2021, SJW Group granted under the Incentive Plan 31,399 and 33,701 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value of $ 68.37 and $ 64.22 , respectively, per unit.

For the three months ended March 31, 2022, and 2021, SJW Group granted under the Incentive Plan 33,621 and 29,459 target units, respectively, performance-based and market-based restricted stock awards granted with a weighted-average grant date fair value of $ 70.35 and $ 66.35 , respectively, per unit.

For the three months ended June 30, 2022, and 2021, SJW Group granted under the Incentive Plan 12,604 and 11,732 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value of $ 58.04 and $ 65.43 , respectively, per unit.

For the six months ended June 30, 2022, and 2021, SJW Group granted under the

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

(in thousands, except share and per share data)

Incentive Plan 44,003 and 45,433 , respectively, one year and three year service-based restricted stock awards with a weighted-average grant date fair value of $ 65.41 and $ 64.53 , respectively, per unit.

For the three months ended June 30, 2022, and 2021, SJW Group granted under the Incentive Plan 32 and 1,182 target units, respectively, performance-based and market-based restricted stock awards with a weighted-average grant date fair value of $ 66.14 and $ 65.70 , respectively, per unit.

For the six months ended June 30, 2022, and 2021, SJW Group granted under the Incentive Plan 33,653 and 30,641 target units, respectively, performance-based and market-based restricted stock awards granted with a weighted-average grant date fair value of $ 70.35 and $ 66.33 , respectively, per unit.

Based upon actual attainment relative to the target performance metric, the number of shares issuable can range between 0 % to 150 % of the target number of shares for performance-based restricted stock awards, or between 0 % and 200 % of the target number of shares for market-based restricted stock awards.

As of March 31, 2022, the total unrecognized compensation costs related to restricted and deferred restricted stock plans amounted to $ 7,618 .

As of June 30, 2022, the total unrecognized compensation costs related to restricted and deferred restricted stock plans amounted to $ 6,721 .

This cost is expected to be recognized over a weighted-average period of 1.88 years.

Employee Stock Purchase Plan

SJW Group’s recorded expenses were $ 93 and $ 88 for the three months ended March 31, 2022 and 2021, respectively, related to the ESPP.

SJW Group’s recorded expenses for its ESPP were $ 89 and $ 182 for the three and six months ended June 30, 2022, respectively, and $ 86 and $ 174 for the three and six months ended June 30, 2021, respectively.

The total unrecognized compensation costs related to the semi-annual offering period that ends July 29, 2022, for the ESPP is approximately $ 31 .

This cost is expected to be recognized during the second and third quarters of 2022.

This cost is expected to be recognized during the third quarter of 2022.

Segment and Non-Tariffed Business Reporting

8 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

March 31, 2022

June 30, 2022

(in thousands, except share and per share data)

2 unchanged sentences

Other business activity of SJW Group not included in the reportable segments is included in the “All Other” category.

For Three Months Ended March 31, 2022

For Three Months Ended June 30, 2022

Water Utility Services Real Estate Services All Other (1) SJW Group

8 unchanged sentences

Assets $ 3,435,758 4,220 44,033 57,036 3,435,758 105,289 3,541,047

For Three Months Ended March 31, 2021

For Three Months Ended June 30, 2021

Water Utility Services Real Estate Services All Other (1) SJW Group

8 unchanged sentences

Assets $ 3,300,414 8,248 45,090 55,770 3,300,414 109,108 3,409,522

For Six Months Ended June 30, 2022

Water Utility Services Real Estate Services All Other (1) SJW Group

Regulated Non-tariffed Non-tariffed Non-tariffed Regulated Non-tariffed Total

Operating revenue $ 264,779 5,842 2,722 — 264,779 8,564 273,343

Operating expense 220,881 5,776 1,824 1,871 220,881 9,471 230,352

Operating income (loss) 43,898 66 898 ( 1,871 ) 43,898 ( 907 ) 42,991

Net income (loss) 22,480 451 631 ( 8,267 ) 22,480 ( 7,185 ) 15,295

Depreciation and amortization 48,969 2,737 601 506 48,969 3,844 52,813

Interest on long-term debt and other interest expense 18,568 — ( 3 ) 9,405 18,568 9,402 27,970

Provision (benefit) for income taxes 4,741 6 213 ( 1,525 ) 4,741 ( 1,306 ) 3,435

Assets $ 3,435,758 4,220 44,033 57,036 3,435,758 105,289 3,541,047

SJW GROUP AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

June 30, 2022

(in thousands, except share and per share data)

For Six Months Ended June 30, 2021

Water Utility Services Real Estate Services All Other (1) SJW Group

Regulated Non-tariffed Non-tariffed Non-tariffed Regulated Non-tariffed Total

Operating revenue $ 259,633 4,729 2,664 — 259,633 7,393 267,026

Operating expense 214,050 3,311 1,762 2,185 214,050 7,258 221,308

Operating income (loss) 45,583 1,418 902 ( 2,185 ) 45,583 135 45,718

Net income (loss) 26,284 1,399 619 ( 4,911 ) 26,284 ( 2,893 ) 23,391

Depreciation and amortization 45,704 219 580 447 45,704 1,246 46,950

Interest on long-term debt and other interest expense 16,518 — — 10,602 16,518 10,602 27,120

Provision (benefit) for income taxes 4,464 385 205 ( 2,644 ) 4,464 ( 2,054 ) 2,410

Assets $ 3,300,414 8,248 45,090 55,770 3,300,414 109,108 3,409,522

____________________

(1) The “All Other” category for the three months ended March 31, 2022, includes the accounts of SJW Group, SJWNE LLC, CTWS and SJWTX Holdings, Inc.

(1) The “All Other” category for the six months ended June 30, 2022, includes the accounts of SJW Group, SJWNE LLC, CTWS and SJWTX Holdings, Inc.

on a stand-alone basis.

SJWTX Holdings, Inc.

had no activity for the three months ended March 31, 2022 .

For the three months ended March 31, 2021, “All Other” category includes the accounts of SJW Group, SJWNE LLC and CTWS on a stand-alone basis.

(2) As of March 31, 2022 and December 31, 2021, the Company has performed an allocation of goodwill associated with the acquisition of CTWS to two reporting units, Connecticut and Maine, which are both aggregated within the Regulated Water Utility Services reportable segment.

had no activity for the six months ended June 30, 2022 .

For the six months ended June 30, 2021, “All Other” category includes the accounts of SJW Group, SJWNE LLC and CTWS on a stand-alone basis.

(2) As of June 30, 2022 and December 31, 2021, the Company has performed an allocation of goodwill associated with the acquisition of CTWS to two reporting units, Connecticut and Maine, which are both aggregated within the Regulated Water Utility Services reportable segment.

Subsequent Event

On July 14, 2022, SJWC entered into a note purchase agreement with certain affiliates of New York Life Insurance, Metropolitan Life Insurance, Northwestern Mutual Life Insurance, and John Hancock Life Insurance (collectively the “Purchasers”), pursuant to which the company will sell an aggregate principal amount of $ 70,000 of its 4.85 % Senior Notes, Series P (“Series P Notes”) to the Purchasers.

The Series P Notes are unsecured obligations of SJWC and are due on February 1, 2053.

Interest is payable semi-annually in arrears on February 1st and August 1st of each year.

The note purchase agreement contains customary affirmative and negative covenants for as long as the Series P Notes are outstanding.

The Series P Notes are also subject to customary events of default.

The closing is expected to occur in January 2023 upon satisfaction of customary closing conditions.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements